Allegiant, Inc lends digital Capital with Interest Free Loans or Advances to its cryptocurrency investors as opposed to banks by not participating in fractional reserve banking which relies on fiat currency or interest bearing demand deposits participated by reserve member banks at the discount rate and therefore do not have to meet the requirements imposed by the Federal Reserve System.
Fractional-reserve banking, the most common form of banking practiced by commercial banks worldwide, involves banks accepting deposits from customers and making loans to borrowers while holding in reserve an amount equal to only a fraction of the bank’s deposit liabilities. Bank reserves are held as cash in the bank or as balances in the bank’s account at a central bank. The country’s central bank determines the minimum amount that banks must hold in liquid assets, called the “reserve requirement” or “reserve ratio”. Banks usually hold more than this minimum amount, keeping excess reserves.
Bank deposits are usually of a relatively short-term duration while loans made by banks tend to be longer-term– this requires banks to hold reserves to provide liquidity when depositors withdraw their money. Banks, working on the expectation that only a proportion (or ‘fraction’) of depositors will seek to withdraw funds at the same time, keep only a fraction of their liabilities as reserves. Thus they can experience an unexpected bank run when depositors wish to withdraw more funds than the reserves held by the bank. In that event, the bank experiencing the liquidity shortfall may borrow from other banks in the interbank lending market; or (if there is a general lack of liquidity among the banks) the country’s central bank may act as lender of last resort to provide banks with funds to cover this short-term shortfall.
Because banks hold reserves in amounts that are less than the amounts of their deposit liabilities, and because the deposit liabilities are considered money in their own right, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying base money originally created by the central bank.In most countries, the central bank (or other monetary-policy authority) regulates bank-credit creation, imposing reserve requirements and capital adequacy ratios. This helps ensure that banks remain solvent and have enough funds to meet demand for withdrawals, and can be used to limit the process of money creation in the banking system. However, rather than directly controlling the money supply, central banks usually pursue an interest-rate target to control bank issuance of credit and the rate of inflation.
We created a systematic innovative approach to creating a money supply multiplier by integrating a public private initiative cooperative trust fund pooled by a syndicate of a prestigious investment group which collaborates specifically on information technology for the purpose of its shareholders. This approach creates non-dilutable value creation by providing interest free loans on margin advances to its cryptocurrency option contract investors through a process of digital hypothecation of holding prospective investor’s cryptocurrency wallets as collateral through a process of securitization until the loan is repaid. This model does not need demand deposits to earn interest daily from fractional reserve lending, increased reserve requirements, increasing or decreasing the discount rate by tightening or expanding credit which require loans to be collateralized by mortgages, deeds, common securities such as treasury bills, notes, and bonds, or those securities issued by government agencies in which are therefore guaranteed as to principal as well as interest. Consequently, with this system we do not need to monitor the velocity of money or the aggregates M1,M2,M3,M4 or M5.
We expanded off of a historically proven and seasoned concept pioneered first by The Federal Home Loan Bank Stock Purchase Agreements with Member Insurance Companies. We utilize a hybrid model to digitally secure interest free loans or advances conceptually similar to the Federal Home Loan Bank Stock Purchase Agreements with Member Insurance Companies which leverages the pooling of member company assets so the pool earns compound interest daily for the benefit of all members utilizing a 10 to 1 ratio as a rule of thumb for every stock purchase unit purchased by members. Allegiant, Inc. mimics this model in an entirely different way then the traditional federal reserve leveraging capital surplus offering members insurance companies indirect participation into the Federal Home Loan Bank stock purchase agreement available to member insurance companies. This stock purchase agreement results in no interest loan financing typically called an advance in which the stock purchased is in effect the collateral to secure the no interest loan. This process of leveraging capital in the past was made available only to Insurance Companies who had to purchase stock in Federal Home Loan Bank. It was never made available to the general public and much less cryptocurrency investors.
The 11 banks of the FHLBank System are owned by over 7,300 regulated financial institutions from all 50 states, U.S. possessions, and territories. Equity in the FHLBanks is held by these owner members and is not publicly traded. Institutions must purchase stock in order to become a member. In return, members obtain access to low-cost funding, and also receive dividends based on their stock ownership. The FHLBanks are self-capitalizing in that as members seek to increase their borrowing, they must first purchase additional stock to support the activity.
The relationship between insurance companies and Federal Home Loan Banks is important and growing. While FHLB advances are small relative to total general account liabilities for most insurance companies, FHLB membership can provide them with an important source of liquidity in times of need. The share of FHLB advances going to insurance companies quadrupled from 2007 to 2016, and many FHLBs have expressed a desire to expand their insurance company membership. What Alleginant Inc has made available through its public private initiative cooperative trust fund of digital investment group shareholders is to manage economically replicating this pooling of assets digitally without having to meet statutory requirements imposed by the national association of insurance commissioners through divestitures indirectly meeting mandatory statutory surplus thresholds or federal reserve requirements.